Australia, Japan reach agreement on free trade

TOKYO -- Japan and Australia on Monday said they had reached “substantive agreement” on a long-awaited free-trade deal, in a rare opening of Japan's protected markets, even as talks to ink a huge Asia-Pacific agreement run into trouble.

The deal was announced as Japanese Prime Minister Shinzo Abe and visiting Australian Prime Minister Tony Abbott held a briefing in Tokyo Monday evening.

It “will create significant new trade and investment opportunities for the two countries,” a press statement said, adding that a final deal would be signed “as early as possible.”

Speaking to reporters, Abbott said the deal marked “truly an historic occasion for both of our countries,” with the pair also agreeing to boost cooperation in security, including joint development of defense equipment.

On Tuesday, Canberra is set to sign a free trade pact with Seoul after four years of negotiations. Abbott will head to China after South Korea as part of an East Asian tour.

Under Abe, Tokyo has entered into talks on the massive Trans-Pacific Partnership (TPP), a proposed free-trade deal that would encompass 12 nations including the United States and Japan.

But there are major sticking points among various nations, including the opening of protected domestic markets such as agriculture and automobiles.

Japan has long been accused of protecting its domestic industries — including the politically powerful agricultural sector — with high trade and other non-tariff barriers, while many of its own exports, including vehicles and electronics, enjoy big sales overseas.

The U.S. has expressed frustration with Japan over its stance on keeping certain sectors out of the TPP, as talks continue.

Tokyo is also in separate free-trade negotiations with the European Union.

Australia would become the first major exporter of farm produce, including beef, to conclude a free-trade accord with Japan, Kyodo news agency said, with a deal expected to give Australian exports a significant competitive edge over U.S. rivals.

Australian Prime Minister Tony Abbott, left, and his Japanese counterpart Shinzo Abe shake hands prior to a National Security Council meeting at the latter's official residence in Tokyo on Monday, April 7. (AP)